KABUL (Pajhwok): Economists have slammed the US move to freeze Afghanistan’s assets as unfair and politically motivated.
They want the Biden administration to reverse the decision and the new Afghan government to take immediate steps to prevent a looming economic meltdown.
The US froze Afghanistan’s over nine billion dollars reserves after the Taliban’s takeover of Kabul on August 15.
The situation deteriorated when Da Afghanistan Bank (DAB) directed local financial institution not to pay a customer more than 20,000 afs ($2000) a week. Companies have been allowed to withdraw up to $25,000 a month in four phases.
Banking restrictions and declining economic activities have caused problems for ordinary Afghans. On Friday, some people rallied in Kabul asking the US to unfreeze Afghanistan’s assets.
US can freeze Afghanistan’s assets
An economic faculty teacher at Kardan University, who wished not to be named, told Pajhwok Afghan News the International Monitory Fund (IMF) controls all financial affairs of central banks of member countries.
In difficult economic situations, the teacher added, member countries could borrow money from the IMF and maintain relationships with other nations.
He explained the US held large shares in the IMF thus influenced the global lender and in certain circumstances it could freeze assets of a country or a group.
Political commentator Maroof Muslimyar said the US had the authority to freeze Afghanistan’s assets.
He added the frozen amount was reserved by the previous Afghan administration that enjoyed support from Washington. The new caretaker government’s recognition by the US and other international players will give it the right to hand over the frozen amount to a legitimate Afghan government.
Why US froze Afghanistan’s reserves
The Kardan University teacher condemned the US move to freeze Afghanistan’s assets as unfair. By doing so, he believed, the US wanted to mount pressure on the Taliban to reduce their purchasing power and stymie Afghanistan’s banking system to slow down transactions and trade activities.
He opined if the government got access to the frozen reserves, it would be able improve governance and strengthen the economy. But the US did not want the new political structure to stabilise, he claimed.
Muslimyar held a similar view, recalling a US advisor’s statement that the previous Afghan government had a strategic relationship with the US.
According to the advisor, the US wanted to put pressure on the new government and freezing of assets could make the situation difficult for the Taliban.
He was of the view that the freeze on Afghanistan’s asset was aimed to create an economic crisis in Afghanistan. As a consequence, people will pressurise the government and bring its legitimacy into question.
According to reports, the US may release Afghanistan’s reserves when the Taliban form an inclusive government and respect human rights, particularly women’s rights.
The Taliban recently announced an acting cabinet and said this cabinet was inclusive and there are possibilities of changes. But people raised objection over the new cabinet and said it is not inclusive and there is no representation of women.
The Taliban, however, pledged to respect human rights, maintain cordial ties with the world and asked the world not to put pressure on the them and if any country did so would remain isolated.
An unjust move
Muslimyar said citing the fluid political situation as a reason for freezing the assets was unjust because such moves put common people under economic pressure.
He urged countries that provide aid to Afghanistan should not politicise their aid by linking political issues to assistance.
He believed that some people who prefer Afghanistan’s assets to remain frozen are former government high ranking officials who want to put pressure on new acting cabinet through this way.
Muslimyar stressed the US should free Afghanistan’s assets and refrain playing with Afghanistan economy because political differences is part of human society and every country has such problems.
On Friday, the US Treasury Department said it had issued two general licences, one allowing the US government, NGOs and certain international organisations, including the United Nations, to engage in transactions with the Taliban or Haqqani Network — both under sanctions — to provide humanitarian assistance.
The second licence authorises certain transactions related to Afghanistan’s import of food, medicine and other items.
“The Treasury is committed to facilitating the flow of humanitarian assistance to the people of Afghanistan and other activities that support their basic human needs,” said Andrea Gacki, director of the US Treasury’s Office of Foreign Assets Control.
Maroof Muslimyar warned if the US did not lift the economic sanctions, Afghanistan would be unable to import goods. This would lead to inflation, depreciation of the afghani and severe economic problems for the people.
The Kardan University economist agreed the release of Afghanistan’s assets was vital to its economic stability.
Necessary steps vy caretaker government
The university teacher recalled the Afghan government did not use frozen funds in the past because the World Bank, Asian Development Bank and Islamic Bank implemented some projects in Afghanistan.
In case of financial constraints, the Da Afghanistan Bank ensured the availability of dollars in the market.
“The projects funded by the World Bank and other lenders have come to a halt. Da Afghanistan Bank resources are limited and thus there is a shortage of foreign exchange reserves, which could be recovered through increasing exports.
“Exports should be done in dollars or Afghanistan could lease out its natural resources. The dollars thus earned should be released to the money market or sent through other channels into Afghanistan.”
Recently, Taliban spokesperson Zabihullah Mujahid acknowledged the national budget was facing deficit die to the freezing of DAB funds by some global financial institutions.
Mujahid said: “We have not collected our revenue so far. We are doing this, Afghanistan is not that poor. We have a revenue collection system and custom offices. In this way, we could support our budget and ensure good governance.”
He continued acting heads had been appointed for the commerce ministry and other relevant institutions. This will help improve economic activities, attract investments and the problem would be addressed.